Dollar edges up before GDP, Japan data ignored

TOKYO, Apr 27 (Reuters) The dollar edged up against the euro on Friday, moving away from its record low against the single currency, as investors awaited U.S. economic growth data for clues about the Federal Reserve's next monetary policy move.

The market showed little reaction to a steeper-than-expected 0.3 percent drop in Japanese core consumer prices in March, which reinforced expectations that the Bank of Japan will take its time to raise interest rates further.

''If the CPI remains in negative territory until September, the BOJ will be less likely to raise interest rates in September as expected by some market participants,'' said Seiji Adachi, senior economist at Deutsche Securities.

The yen fell against major currencies on Thursday, weakening to its lowest level against the euro since the single currency was launched in 1999.

The BOJ holds a policy meeting on Friday.

The Japanese central bank was expected to leave monetary policy unchanged at the meeting after it raised the overnight call rate in February by a quarter-point to 0.5 percent -- the lowest among industrialised countries.

The market now awaits the BOJ's twice-yearly outlook on the economy and prices at 0600 GMT and Governor Toshihiko Fukui's post-meeting news conference for clues about the timing of the next interest rate increase.

The dollar rose modestly to 119.65 yen compared with around 119.55 yen in late New York trading on Thursday.

The euro stood at $1.3590 slightly down on the day.

The single currency had climbed as high as $1.3667 on electronic trading platform EBS on Wednesday, in sight of the highest level since the single currency was introduced, on expectations for higher euro zone interest rates in coming months.

The euro eased to 162.55 yen from around 162.65 yen, although the pair remained in sight of its all-time peak of 162.80 yen.

The market will also pay attention to the first estimate of US growth data for January-March at 1230 GMT, which will provide more insight on the world's biggest economy and could give some clues about the Fed's next policy move.

The preliminary GDP estimate for the first quarter was expected to show that the economy grew at an annual rate of 1.8 percent, the slowest since late 2005.

REUTERS DKS BST0635